LANSING – If Governor Rick Snyder’s plan to overhaul Blue Cross Blue Shield of Michigan becomes law, one potentially major result of the proposal would be the ability for Blue Cross and its subsidiary, Accident Fund, to branch out into other forms of insurance.
Andy Hetzel, Blue Cross vice president for corporate communications, said the Blues have no immediate interest in selling other lines of insurance such as auto, home or life insurance and remains committed to focusing on health insurance. But the Accident Fund has long wished to be able to sell more than worker’s compensation insurance to put it on a level playing field with its competitors that sell multiple lines of insurance, Hetzel said.
Current law in PA 350 of 1980, which regulates Blue Cross, limits the company and the Accident Fund to selling only health and worker’s compensation insurance, respectively.
“Yes, it would be allowed, but we’re staying committed to our core health business,” Hetzel said when asked about Blue Cross getting into the property/casualty insurance market. “We don’t have the knowledge base in our business to be able to offer those types of products. We have incredible health care and health insurance knowledge, but it’s not like we could get right into property insurance.”
Asked if the Blues would like to have the option of selling other types of insurance, Hetzel said: “The option is available to all the insurers regulated under the Insurance Code. Those companies can diversify, they can be very nimble with how they run their businesses, they can get into other types of insurance they desire. The only company that’s restricted is Blue Cross because of provisions of Public Act 350 that are 32 years old.”
Under Snyder’s plan, PA 350 would be repealed and the Blues, converted to a nonprofit mutual company, would be regulated under the Insurance Code like other insurers.
But Hetzel said health insurance is much different than property and casualty insurance and the issue not a focus of the Blues.
“We frankly can’t do health insurance as well as we can under the existing regulatory structure and that’s what our focus is now,” he said.
However, Accident Fund, which the state sold to the Blues in the 1990s, does want to expand its range of products.
“The statute artificially limits the growth of a Michigan company,” Hetzel said. “We think it’s really a no-brainer for the Legislature to want a Michigan-based company that’s committed to Michigan, that’s headquartered within spitting distance of the state Capitol, that has proven it’s growing jobs in Michigan. That is an easy vote for anyone that supports job creation in Michigan to make.”
Stepheni Schlinker, Accident Fund spokesperson, said she could not say what types of insurance the company might offer since it has not had authority to sell other forms of insurance and thus has not had the opportunity to think about the subject. She said Accident Fund’s competitors sell products like auto and life insurance.
Snyder press secretary Sara Wurfel said the subject of allowing the Blues and the Accident Fund to offer other insurance products was not the administration’s focus in developing the plan to convert the Blues to a nonprofit mutual company that would be regulated under the Insurance Code.
“That hasn’t even come up as part of it. That’s just what Michigan has as its Insurance Code.”
Peter Kuhnmuench, executive director of the Insurance Institute of Michigan, which has as members both property/casualty insurance firms and Accident Fund, said he is waiting to see legislation on the issue. The ability for the Blues to sell auto insurance could be a concern for no-fault carriers with the Blues’ size and ability to negotiate lower fee levels.
However, if the legislation really does create the level playing field that Snyder has promised, that could ease such concerns, he said.
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